With Prime Minister Justin Trudeau and Premier Kathleen Wynne's announcement of funding for the $1.185-billion Port Lands Flood Protection project, that is the objective: to let the Don River flow more freely into Lake Ontario, as it once did.

Once it's done, governments believe that money and people will flow into Toronto's port lands, a massive, underused portion of the city. It's a strategy decades in the making – and the way it's done might set a template for the next generation of city building.

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The focus of the project is to reconstruct the mouth of the Don River, which now runs in an artificial channel and is prone to flooding. The project will create a new river valley set in a park. This waterfront green space will allow the river to safely spill over its banks, allowing 290 hectares of the port area to be developed.

The zone is "the single largest stretch of undeveloped downtown waterfront in North America," as Ms. Wynne put it at the announcement. The payoff of billions in land value will generate "a substantial return on investment," Toronto Mayor John Tory said, "for all concerned."

That is likely to be true. So why hasn't this already happened? Because Toronto's waterfront is out of sight and out of mind; and because it's a big job.

Indeed, constructing a new mouth for the river – on contaminated land – will be one of the biggest infrastructure projects in the history of Toronto. And there's no constituency for it yet; no one lives here. The area was marshland until it became a port, and for half a century there's been little activity there.

"But now, it's time," said Mark Wilson, a long-time waterfront activist and the former board chair of the agency Waterfront Toronto. "The idea is so compelling that people keep getting on board." Waterfront Toronto was founded in 2001, and despite early skepticism, it has been doing a solid job of building out adjacent land with a mix of market-rate and affordable housing, office space and parks. Corktown Common, which includes its own berm for flood protection, allowed the development of the West Don Lands, a mixed-income neighbourhood completed in 2015.

Waterfront Toronto has started shifting downtown Toronto's centre of gravity to the east. Now that will continue into the port lands, which will serve as a large canvas for an ambitious series of policy objectives.

Under its new chief executive officer Will Fleissig, Waterfront Toronto has expanded its goals to address inclusivity – with affordable housing, economic development based on technology and low-carbon city building. "This is a once-in-a-lifetime opportunity to build a sustainable, inclusive community," he said Wednesday.

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But the first goal is flood protection – mitigating the effects of extreme weather and climate change.

"Flooding happens," the Prime Minister said. "It happens more frequently, and its effects are felt across the city." The plan's flood protection measures are critical, and will become more so as climate change increases the frequency of extreme weather events – something that Toronto, along with other Ontario and Quebec cities, has already seen in recent years.

The Don Mouth scheme is based on urbanistic and ecological thinking. A design led by landscape architects Michael Van Valkenburgh Associates and planner Ken Greenberg won an international competition in 2007; right now a new neighbourhood plan, along the new mouth of the river, is being overseen by the firm Urban Strategies.

A tamed river will also allow development of the former Lever Brothers site just east of the Don, where developer First Gulf is proposing an office and retail cluster of 12 million square feet. That scheme, championed by Mr. Tory, will clear its biggest technical hurdle when the flood protection work is done.

These developments will eventually shift Toronto's centre of gravity to the east, creating neighbourhoods for tens of thousands of people, and reconnecting the city to its waterfront, what Mr. Fleissig calls the city's "front porch."

All this is possible because all three levels of government are on the same page; Waterfront Toronto is a creature of the city, the province and the federal government, which gives it a measure of useful independence but also makes it reliant on fresh negotiations for new money. This deal has been in the works for seven years, and some observers have worried that a possible change in government at Queen's Park might derail this Toronto-centric project. But Mr. Fleissig is adamant that contracts and construction will prevent that from happening. "Shovels will be in the ground this calendar year," Mr. Fleissig promised. "This is happening."

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If so, and Fleissig is successful, the new neighbourhoods at the port lands should be a showcase for clean tech and smart-cities initiatives; mixed-income housing with a strong presence of families; and public space that makes room for nature. It will also be walkable, bikeable and served by transit. When the transit gets built, that is: an LRT, long planned by the city, is as yet unfunded. Mr. Fleissig hinted that this could be an opportunity for "a new kind of partnership" with developers that are already building in the area.

There will, most certainly, be hiccups. And the design of this new area is going to demand tough scrutiny.

But the prospect of a dense, walkable, mixed-income, green neighbourhood is promising – as is new life on desolate downtown land. The real question is when these planning goals will show up in the rest of the province and the country, where sprawl continues unsustainably. A new model for Canadian cities seems likely to emerge here; and that is, at the very least, a start.

Raw footage of the flooded picnic area and grass fields on Toronto's Olympic Island